Caterpillar North America Sales Collapse Suggests US Economy Back To 2010 Levels

Tyler Durden's picture




 

While we have wondered on numerous occasions previously if the collapse in lumber prices is the far more accurate indicator of end demand for housing (as confirmed by the recent collapse in multi-family housing starts), perhaps an even better indicator of trends in housing (and by implication the broader economy) is private sector intermediate end demand, such as Caterpillar North America sales, which unlike government data, are far less subject to political intervention, interpolation, guesswork, seasonal adjustments and otherwise, general manipulation.

And even though we have previously reported on the woes ailing the world's largest seller of bulldozers, excavators and wheel loaders, such focus was primarily targeted in the offshore markets, and especially China (the abysmal European market needs no mention). So maybe the time has come to shift attention to the US, where as Caterpillar just reported, not only are all foreign markets still trending at several impacted levels, but where US machine retail sales just saw the biggest tumble in three years, falling 18% Y/Y: the most since early 2010. What is more disturbing is that CAT equipment is used in far-broader economic activities than merely housing, and likely is a far more accurate indicator of true industrial end-demand than any other number cherry-picked by the government.

Whether one can extrapolate general trends in the US economy based on how Caterpiller is doing in its North American market, is an open-ended (rhetorical) question which we leave to readers.

However, maybe a far better question is whether CAT NA sales is the same true proxy for the state of the US economy, as electric consumption - that Achilles heel of Chinese economic data manipulation - is to China.

Compare and contrast the chart above, with the chart below, showing the collapse in Chinese electricity consumpion.

If the answer is yes, and if indeed both the US and Chinese economies are now operating at a true level not seen since 2010, then just how bad is the rest of the world, if somehow the US continues to be perceived as the cleanest dirty shirt while the world's fastest marginal growing economy is in fact, crashing to earth?

Source: CAT Dealer Statistics

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Mon, 05/20/2013 - 11:53 | 3580465 spine001
spine001's picture

wow

Mon, 05/20/2013 - 11:58 | 3580484 DoChenRollingBearing
DoChenRollingBearing's picture

Indeed.  That ain't good: Cat sales down here and China electric power going nowhere.

Mon, 05/20/2013 - 12:02 | 3580501 MisterMousePotato
MisterMousePotato's picture

China electric power use appears to be an almost picture perfect leading indicator for Cat sales, which is an almost perfect leading indicator for ?

Mon, 05/20/2013 - 12:04 | 3580511 King_of_simpletons
King_of_simpletons's picture

QE halt will be violent for the market: Fed Fisher

http://finance.yahoo.com/news/qe-halt-too-violent-market-112743379.html

Mon, 05/20/2013 - 12:11 | 3580538 spine001
spine001's picture

QE halt is the only option we have, and as soon as possible...

By creating financial projects with higher NPVs than real projects and with similar or even lower risk, QEs are killing economic growth. QE to infinity while avoiding the pain today will destroy the real economy on its path. No CEO can invest in projects with lower NPV than the alternative similar risk investment. And while the music of QEs around the world keeps on playing there are very few real economy projects with better NPVs (NPV = net present value)

Until next time,

Engineer

Mon, 05/20/2013 - 12:14 | 3580553 King_of_simpletons
King_of_simpletons's picture

Who cares about "growth" when money is free.

Stock market is for loading up on free money these days.

Mon, 05/20/2013 - 12:18 | 3580574 FL_Conservative
FL_Conservative's picture

Government-sponsored reporting is manipulated?   Whoda thunk it?

Mon, 05/20/2013 - 13:01 | 3580785 MachoMan
MachoMan's picture

Yes and no...  I have a sneaking suspicion that many of those who choose to forgo financial assets for more "real" projects may be tremendously benefited in the future and the rates of return today aren't necessarily indicative of tomorrow...  kind of like "implied odds" in poker.

Mon, 05/20/2013 - 12:24 | 3580609 yogibear
yogibear's picture

All jawboning. They can't stop. Most people realize this. It's like the little boy crying wolf. After while nobody listen's to the fed talking about curtailing QE.

Go away Fisher. The group of Fed members now running the show are all avid money printers. They print until the US dollar crashes and burns,. 

Mon, 05/20/2013 - 12:03 | 3580502 Doubleguns
Doubleguns's picture

Don't worry, Benny and the Jets (85 billion) can fix it.

 

http://www.youtube.com/watch?v=QjUk3Bp16zs

Mon, 05/20/2013 - 13:28 | 3580907 General Decline
General Decline's picture

Benny and the ink Jets

Mon, 05/20/2013 - 11:54 | 3580470 thismarketisrigged
thismarketisrigged's picture

and with this news, cat is up 1.15 percent today.

 

fundementals suck so bad, we know that, but unfortunately this market has gone a long time without trading on fundementals.

 

its all ben ben ben and print print print.

 

its truly frightning

Mon, 05/20/2013 - 11:59 | 3580491 augustusgloop
augustusgloop's picture

Lower sales = Less operational risk. Buy.

Mon, 05/20/2013 - 12:05 | 3580515 Dr. No
Dr. No's picture

Back-up the [797F mining] truck....

Mon, 05/20/2013 - 12:20 | 3580593 spine001
spine001's picture

This is exactly what I meant, even CAT is better off investing in SPY than in their own business. So who will invest in buying goods producing assets from CAT? Only a fool without access to a finance degreed employee. Meaning most of us!

While QE lasts, the destruction of our productive system will continue. Those who produce real goods and services are getting poorer and poorer by doing that --> therefore microeconomy 101 says that fewer and fewer economic agents will remain doing it, until when? Well until the system breaks (first deflation since people won't have the money to buy the available goods and services and consumption will go down, then production falls below needs and demand is activated, as demand activates and there are not enough goods and services, prices will skyrocket up as people start calling on their paper assets to survive, which brings those down and the cycle will feed on itself, In modern times, this already happened in Argentina, where the value of the peso today is 10 quadrillion times higher than the value of the peso in 1969, and life still goes on... so if you think it impossible for this to happen, Argentina is living proof that it isn't!!! and no going back to the stone age (although, very few ethical values and morals remained)

 

Until next time,

Engineer

 

Mon, 05/20/2013 - 12:09 | 3580530 Doubleguns
Doubleguns's picture

Fundementals are now manipumentals or Elmer Fuddamentals. Take you pick. 

Mon, 05/20/2013 - 13:00 | 3580777 dontgoforit
dontgoforit's picture

This would be funny if it weren't for what it is ultimately going to do to us.  Will you kill a neighbor to eat? 

Mon, 05/20/2013 - 13:06 | 3580804 LFMayor
LFMayor's picture

F yeah!  They taste just like chicken.

Wendigo Meats, LLC.

Mon, 05/20/2013 - 12:13 | 3580549 Chief Falling Knife
Chief Falling Knife's picture

When CAT reported earnings last month, and missed consensus estimates badly, the stock was up almost 3% that day too.  First miss on earnings since early 2011, and misses on revenue now 4 out of the last 5 quarters.

But apparently none of that matters with magical QE floating around... into TBTF bank reserves and trading accounts.

Mon, 05/20/2013 - 12:23 | 3580607 spine001
spine001's picture

You are correct, it doesn't matter. 85 billion per month of POMO (QE) overwhelms a decrease in sales by CAT. If it had increased its sales and the economy would be moving forward, CAT would have gone up by 30% since the effect is not symmetrical. Once the fire starts we will all burn due to hyperinflation, but while the money is not going anywhere, nothing happens. This is equivalent to try to heat a city in winter by pooering GAS in the streets. When the spark hits, you'll be warm!!!

Until next time,

Engineer

Mon, 05/20/2013 - 13:38 | 3580962 Dan Conway
Dan Conway's picture

CAT's market cap is about $59 billion right now.  Ben and the inkjets could buy them within several weeks.  I just don't know if the fed can buy stocks outright :)!

Mon, 05/20/2013 - 13:52 | 3581016 Never One Roach
Never One Roach's picture

Good point, spine. i see a flood of money being 'tied up' and when it is finally released --in wages, sales, etc-- asset prices will rise substantially as tends to happen when too much money runs after too few assets.

Mon, 05/20/2013 - 13:29 | 3580911 gaoptimize
gaoptimize's picture

Yesterday, while watching Lou Dobbs, the CAT stock increase from Friday scrolled across the screen and I blurted out to my 7-yo daughter: "If the Fed wasn't printing $85B a month, I'd short the crap out of CAT."  I knew she didn't understand "short" and "CAT", but I just couldn't hold it in.  This article and today's market reaction validated me on both points.

Mon, 05/20/2013 - 11:55 | 3580472 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Very bad?

And that is why the pedal is to the metal for QE.

No one really wants to get a taper worm ... talk down markets a bit, perhaps. Smooth the mania. That's about it.

 

Mon, 05/20/2013 - 12:26 | 3580623 spine001
spine001's picture

The QE pedal IS NOT to the floor, GOD help us if they do that. The FED has NO limit whatsoever about how much QE they can do. Given the degree of hubris, carelessness about the potential risks and consequences of what they are doing that they have shown up to date, I am scared of their power... NOBODY should have that much power over our lives...

Until next time,

Engineer

Note: Power corrupts, absolute power corrupts absolutely

Mon, 05/20/2013 - 11:58 | 3580475 Fidel Sarcastro
Fidel Sarcastro's picture

So i guess CAT will get ANOTHER upgrade then?

 

CAT lost money in the last Q, PROMISED to lose more as the global economy slows and had a Chinese division get nailed with accounting FRAUD...and was upgraded.

 

Yup - normal now.

Mon, 05/20/2013 - 12:02 | 3580500 El Oregonian
El Oregonian's picture

And to think these A-Holes LOVED Obamacare and in fact, became props for Obungles when he was trying to RAM the Bill up our asses. 

CAT. SCREW YOU, ya Jerks you deserve nothing less...

Mon, 05/20/2013 - 12:13 | 3580552 BraveSirRobin
BraveSirRobin's picture

I may be wrong, but my recollection is that CAT management was NOT a fan of OBAMACARE and was suprised when the EWNC (Emporer with No Clothes) used them as a prop. They were among the first to announce the expected negative financial impact from the law.

Mon, 05/20/2013 - 11:56 | 3580476 Dr. Engali
Dr. Engali's picture

Didn't you hear that compnies like Cat and Walmart no longer reflect what is going on in the U.S economy? Now when Cisco beats that's a sign life is good, because you can't have too many routers...doncha know? 

Mon, 05/20/2013 - 13:19 | 3580864 Non Passaran
Non Passaran's picture

CAT << Cat6a

Mon, 05/20/2013 - 13:34 | 3580945 Crash Overide
Crash Overide's picture

Doesn't Cisco have the contract for the police state routers?

Mon, 05/20/2013 - 11:56 | 3580477 scatterbrains
scatterbrains's picture

maybe if BB would quit bullshit'n and increase the rate of the stock market climb bitchezz would be buying more dozers.. why wont  Shumer tell that nigga to get busy-er?

Mon, 05/20/2013 - 11:58 | 3580483 alien-IQ
alien-IQ's picture

I guess that explains why the stock is up more than $1??? WTF, this market is a fuckin joke.

Mon, 05/20/2013 - 12:08 | 3580509 forwardho
forwardho's picture

Massive stock buy-back.

This action has a multiplier effect on stock prices.  It reduces the availability of "common" stock for purchase.

Its the current rage with all the big boys.

And best of all... they get to use funds borrowed at 0.00%

Mon, 05/20/2013 - 19:49 | 3582302 Mentaliusanything
Mentaliusanything's picture

A stock buy back indicates clearly that the Company can find no investments at all which would create wealth. This points to an ecomony that is not growing.

Coupled with M&A its a very poor outlook for the future.

Well done Mr Bernanke you have strangled the Cat

Mon, 05/20/2013 - 11:58 | 3580486 jubber
jubber's picture

CAT currently up over $1

Mon, 05/20/2013 - 11:59 | 3580492 madbraz
madbraz's picture

I'll give it less than a month until CAT comes out saying that it will not provide these figures anymore, much like WMT.

Mon, 05/20/2013 - 12:00 | 3580498 rosiescenario
rosiescenario's picture

Time to get our $$$ really debased....obviously Kubota is enjoying an unwarranted advantage over Cat....the Feds need to get going on this and stop the silly talk about tapering....

 

....and speaking of China....how about that report today concerning cadmium levels found in their rice? Fortunately, rice is not an important part of their diet and the government's advice to cut back on its consumption should adequately address that potential problem.

Mon, 05/20/2013 - 12:03 | 3580504 Flounder
Flounder's picture

Whew...that's a big relief.  Please no more talk of tapering off the money printing.

Mon, 05/20/2013 - 12:03 | 3580505 scatterbrains
scatterbrains's picture

How many my silver bears trapped down in the well after last night's tease ?  Enjoy it bitchezz!

Mon, 05/20/2013 - 12:04 | 3580512 venturen
venturen's picture

What if you measured it in renewables...would it go up then? 
We could measure in name plate capacity! 

Mon, 05/20/2013 - 12:06 | 3580520 Sutton
Sutton's picture

" we are never,ever raising rates"   Taylor Bernanke

Mon, 05/20/2013 - 12:07 | 3580521 Zen Bernanke
Zen Bernanke's picture

tough break for caterpillar, but the market don't give a shit. 

Mon, 05/20/2013 - 12:09 | 3580528 Jack Burton
Jack Burton's picture

I'm not seeing many housing starts around here. The land the city opened for construction and spent lots of money providing untilites to sits empty and the woods is growing back in. The city bonded and built roads and sewers for several hundred new homes in a town of 3,400 people!

Yes, I said 3,400 people! This was right at the bigging of the bust. I warned the city council that they were putting us in debt for homes that would not be built in our lifetimes. I said the hosuing bust was coming, if not already here. They told me I was nuts, and that we aould be a destination community for those seeking a quite town within 30 miles of a regional medical and educational center. Small regional, but there are some jobs there. I said, people don't want to drive 60 miles a day when winter lasts 6 months and gas is spiking. Nope, gotta look forward,

So now we owe on the bonds, and developers are not building on all their lots. Last year two homes went up on a hundred lots. One was built by a developer to retire into. We built his raod and sewer for him.

Mon, 05/20/2013 - 12:34 | 3580662 spine001
spine001's picture

Jack Burton, I accompany you in your feelings. it is a terrible thing in life to be able to see clearly what is coming, just  because you can see 20 moves ahead in a chess game when most people can only see 1 or 2. It is not a gift, it is an incredible pain. And attempting to explain yourself all the time only builds you a phame of being "nuts". As you well say.

I wish I was a lot dammer and could enjoy life like others that have NO clue about what is happenign, since what will happen will, whether I am in pain about it or not.

For instance the CADMIUM in rice was foreordained since Fukushima, how did it help to KNOW that from day one? How much did it help anybody that I knew how many babies were dying all over the world due to Fukushima... How did it help anybody the open letter I sent to Bernanke attempting to explain to him in 2009 why his thesis was wrong and QE was only going to make things worse and not help recover from the crisis?

Only sharing you pain.

Until next time,

Engineer

Mon, 05/20/2013 - 14:01 | 3581048 Ident 7777 economy
Ident 7777 economy's picture

I wish I was a lot dammer ..."

A 'lot damner' or a 'lot younger' ... before and after ...  

Mon, 05/20/2013 - 15:09 | 3581311 Almost Solvent
Almost Solvent's picture

I wish I was little bit taller
I wish I was a baller
I wish I had a girl who looked good
I would call her
I wish I had a rabbit in a hat with a bat
And a six four Impala

Mon, 05/20/2013 - 12:09 | 3580531 thismarketisrigged
thismarketisrigged's picture

in this market, ibm, cat, wmt, mmm,fdx,ups, they are not the leading indicators for the economy, they r irrelevant,

 

csco on the other hand is where we should be looking. that is what indicates a good and healthy economy. 

 

come on guys, dont you know. 

 

also, if i ever hear any analysis try to tell me earnings are important in this market,  i will punch a whole through my wall.

 

take mmm for example. they missed horribly in there last earnings, the stock is now up 4 dollars more than what the price was before the last earnings report.

 

ibm, same thing, horrendous earnings report, stock is pretty much back to where it sold off from, and should be at 230 by weeks end.

 

things dont make sense, hopefully 1 day they will again.

Mon, 05/20/2013 - 12:10 | 3580534 BraveSirRobin
BraveSirRobin's picture

Caveats:

(1) Sales of major equipment producers can be volatile.

(2) CAT may be losing market share. To look at one company in isolation to the entire market segment could be misleading.

(3) Are there disruptive technologies impacting sales we are not aware of?

(4) Is there correlation between CAT YOY or MOM sales and recession? The data given is not clear at all.

Mon, 05/20/2013 - 14:04 | 3581055 Ident 7777 economy
Ident 7777 economy's picture

YOY misleads in this case; looks like a recovery in 2012 from yr or so before, ... better to average over a longer period and make an obs ...

 

Tyler 'does this' just to test the comprehension of readers, 'chart interpreters'.

Do NOT follow this link or you will be banned from the site!